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Startup City

When I was at the New Cities Summit in São Paulo, Fahd Al-Rasheed said that their masterplan for the Emaar Economic City project had to change three times in seven years, adapting to changes in markets, demands and technologies. Although their proposal has some of the latest governance aspects from Startup Cities such as city equity for residents, their masterplan was a top-down plan for a city of 2 million people. After his presentation asked him how

would they deal with this development "cap" and continue their administration with further changes in time: he admitted that wasn't an easy question.

The goal in providing guideline to a Startup City is to avoid these large changes in a masterplan, a project that will probably soon become obsolete as one can't stop changes from being made: after building the masterplan it is literally "cast into stone". I recently argued for a Minimum Viable Community (the Minimum Viable Product for Startup Cities) as an attractor for first investors. But continuing development must be decentralized in order to generate emergence, complexity and participation of local residents in building the city in order to avoid coordination problems.

Mathieu Hélie, an urbanist who does research in complexity, makes this point when writing at his website Emergent Urbanism, and condensed it into this comment:

"You can make centralized, bureaucratic rules that try to catch every mistake that is made, and yet still miss the next unknown mistake. That was the problem with gas stations, no one had any experience with gas stations before, and it couldn't be known they would be a mistake. Ideally we need rules that can catch all mistakes while remaining open-ended. In natural and organic systems, these rules are usually localized and contextual. In cellular automata, they are based on immediate neighbors, yet create infinitely complex structures.

That’s the key to emergence. Defining very simple rules that nevertheless can create endless complexity in the structure of things.

You may think that third world slums are horrible places to live, and in comparison to our cities they definitely are. But what is not understood is that slums are open-ended systems, while modern planned cities are closed-ended. Slums offer the best solution to people who have limited choices. It’s the modern planning that creates the slums because it can’t fit everyone and everything that is needed. The solution is not to demolish slums, but to make modern cities more open-ended. Then the slums will be abandoned"

Mathieu's opinion is amazingly close to Nassim Taleb when talking about "Antifragile: Things That Gain With Disorder", his latest book on what makes complex systems such as living organisms, economies and cities thrive:

"A complex system, contrary to what people believe, does not require complicated systems and regulations and intricate policies. The simpler, the better. Complications lead to multiplicative chains of unanticipated effects. Because of opacity, an intervention leads to unforeseen consequences, followed by apologies about the “unforeseen” aspect of the consequences, then to another intervention to correct the secondary effects, leading to an explosive series of branching “unforeseen” responses, each one worse than the preceding one."

Following the path towards healthy emergence, this post intends to sketch simple urbanism guidelines for a Startup City. In the same way, this will be a permanent draft, constantly changing with new and better ideas that will probably arise in the comments section. I will also ask for readers to suggest new topics of discussion if it remains an unresolved urbanism issue in the Startup City.Land Ownership
The current land ownership model for a Startup City is for the administrator of the ZEDE to own all land, which he then will lease or rent to developers and, therefore, residents. It is also proposed that residents receive equity shares in the city, so they have actual ownership over the enterprise which is the city. That mixed with the "shopping mall" model, the Startup City administrator works both as a manager of a land property fund as an administrator for how that land is developed.

As we see in Hong Kong, when contracts are long term and respected by rule of law, residents will be able to develop and trade their properties just like we expect them to societies that entitle full property, sometimes even better. Brazil has a very restrictive land use legislation with mixed interpretations, giving the Municipal administrator a lot of power to limit or use eminent domain towards someone's land, and residents will always have to respect local legislation and rules despite their title of "full ownership". What matters is the feeling and practice of ownership in order to create a market of land and real estate property.To build or not to build?
A planned neighborhood or "MVC" would probably be recommended in order to give security to first buyers. Preparing a few undeveloped lots with infrastructure also sound good in order to expand rapidly and to lease/sell to first investors. This can be an investment by the Startup City administrators themselves as a first venture to attract citizens or, preferably, by a partnering development company who finds it an attractive venture, with Startup City administration focusing on the land administration throughout the entire development area. Nevertheless, to reach dynamic growth the city will need to reach many different developers, making way to a real estate market. Different developers must be allowed to build planned neighborhoods or the breakdown of this situation: infrastructure for future developments or buildings in vacant lots surrounded by built infrastructure.Redevelopment
The problem contemporary cities encounter today is multiple owners using the same land parcel, tall buildings with hundreds - sometimes thousands - of people who have coordination problems to decide if they want to sell their building and/or terrain to another developer. In Brazil that is the case, as residents own full property of their apartments. Builders then have to buy them out one by one, a common strategy but that takes out flexibility from the system, as it has large transaction costs and risks, specially with large buildings.

One criteria can be that a single entity (individual, manager or company) must represent each lot in order to facilitate negotiations, urban redevelopment and eliminate coordination problems. Buildings are then considered units, and apartments must not be considered equally as property units as its redevelopment is attached to the building. Horizontal subdivisions can be made, but either each house has the right to decide their lease terms or a property manager will decide the terms of the subdivision as a whole, negotiating redevelopments of specific lots. In the Startup City property model people will already only be leasers of each lot, so the restriction for citizens to fully own apartments wouldn't be much different from the rest of the city.Building certification
One of the arguments for a strict building code regulation is the information asymmetry between builder and consumer, where the latter has no idea about the quality of the product he is paying for with a bonus of a high risk for third parties in case of structural miscalculations or damages. Nevertheless, currently in Brazil there is close to zero enforcement of the established building codes in practice. There aren't government inspectors to analyze structural calculations and almost no sign of government inspectors in building sites to check if technical issues are being properly executed. Regulation during project phase usually targets architectural design concerns such as building density and parking spaces and building site inspection usually targets labor safety issues.

Theoretically, the person responsible for the collapse of a building will face criminal charges and can be arrested. Nevertheless, that is rarely the case. The most famous case in recent history was the collapse of the Palace II, a large 22-story building in Rio de Janeiro. The main stockholder of the responsible real estate development company was Sérgio Naya, also a former politician, who was arrested for a total period of 137 days because of this case. Eventually he was considered innocent as he wasn't considered as technically responsible for the damage.

In favelas, the Brazilian slums, no building at all follows any kind of building code. Despite lack of regulation in both formal (real estate market) and informal (favelas) cases, there are relatively low numbers of collapsing buildings when considering the high number of them in apparently dangerous conditions. That was also the case in Kowloon Walled City, where constructions reached 14 stories with no reports on collapsed buildings.

What makes that happen? In formal markets, a strong natural regulator is the crossed reputation from several different suppliers in a construction site: developers, architects, structural engineers, plumbing and electrical contractors, real estate agencies all have their names related to a specific building they are working on, so they have incentives to be permanent inspectors of a specific building site. Also, construction magazines, awards and quality seals from ISO to LEED are sources that reduce information asymmetry between builders and their consumers. The Brazilian building market, both formal and informal, is also very homogeneous and conservative with its technology, relying on decades (sometimes centuries)-old building techniques. This creates a market where there is a known "formula" for every new building: known processes that, if replicated, will have small chances of errors leading to buildings falling everywhere.

Buyers also usually do much more research in order to find problems and bugs in their U$200 smartphones than their U$200,000 dollar houses they will live in, as they blindly rely on government regulation for product quality when inserted in formal real estate markets. In informal settings, as residents know there isn't a regulator they become much more responsible towards the buildings they will inhabit, routinely knowing how to criticize the contractor or even learning how to build their own houses.

Nevertheless, Startup City developers may still be afraid of bad marketing if accidents due to building problems do happen. At the same time, the implemented system must be accessible and flexible enough to allow poor residents, avoiding the formal-informal quality gap that Brazil shows with its favelas, as building codes establish a middle-class quality floor to any kind of formal building.

A solution my arise by create a rating system for building certification from the Startup City administration itself or try to attract companies or professionals to deliver the service. Australia allows for private building certification, considering accredited building certifiers, and professionals working in the Startup City as architects or engineers can be low-cost providers of this kind of service. This system would create the kind of responsible consumer culture we have with our electronics in real estate, while lowering the information asymmetry in order to reduce risks of large damages, as buildings are more expensive than electronics and usually don't generate life-threatening risks.

Lot sizes
No predetermined lot sizes, to be determined by each subdivision contractor.

Density
As Alain Bertaud argues, "density is not a design decision":"There is no reason to plan to increase the densities of cities, there is no reason to plan to decrease densities either. When it comes to densities, the market does a reasonably good job of reflecting people’s preferences. Density is simply a land consumption indicator. High land prices tend to reflect consumers’ preferences for a particular location (though in some cases high land prices also reflect land-use regulations that artificially constrain supply). Where land is expensive, the price per square meter of housing will be higher. It’s no surprise then that people consume less land and floor space where land is expensive, which in turn leads to higher densities."

One might argue for density restrictions in order to fit the capacity of existing infrastructure, but when working within the framework of a Startup City I imagine infrastructure operators will be able to increase their prices in order to reduce consumption of electricity, water, sewage, etc. This price increase will signal the market that a solution is needed, either from sustainable sources of consumption (reneweable energy, water reuse, etc.) or a higher capacity infrastructure, which can arise either from redeveloping current infrastructure or building new developments in other areas with cheaper infrastructure costs. This decision won't be held by a city designer but by the decentralized nature of the price system.

Architectural restrictions: Height
The main arguments against tall buildings are that they increase temperatures, wind speed and reduces sunlight. But tall buildings also give option to people who are willing to sacrifice those urban qualities for lower costs, larger apartments, better views and, in most cases, higher density and walkability. The decrease in certain qualities is indeed recognized but hard to control when the final goal is to be attractive, accessible and dynamic.

Architectural restrictions: Setbacks
Artificial setbacks have been proven to create negative results for cities. Side setbacks artificially increase travel distances and decrease walkability as facades are disconnected from each other. Front setbacks also increase the distance from the building to the pedestrian, decreasing value of commercial properties when this is the case. Back setbacks restrict efficient use of terrains as buildings can't adapt their form to the best solution considering adjacent situations. Most of the times setback areas also have poor land use: side setbacks have bad proportions, front setbacks end up in a grey area between public and private and builders usually invent uses to use their back setbacks such as common areas. In the other hand, eliminating setbacks completely also reduces possibilities for tall buildings, which need some space around it for structural reasons. Setback restrictions restrict adaptation and architectural creativity for each lot, and shouldn't be implemented.

Zoning
Modern city zoning limited mixes of uses, artificially increasing distances and decreasing walkability. Today zoning boards frequently want to impose mixed residential and commercial through Smart Growth city planning, even in neighborhoods that don't have that character, resulting in many cases in lower commercial rents, empty stores and, in those cases, lower residential rents. Commercial, residential and industrial areas also arise naturally as they can have positive gains from scale (reduced noise in residential areas, increased business interaction in commercial areas, reduced logistics costs in industrial areas). There is an argument towards limiting industrial activities throughout the city, but the problem isn't industrial production itself, but noise and pollution. Industries already tend to stay far from center areas due to lower costs and proximity to highways, ports and airports, and many contemporary industries today are clean and silent for neighbors.

Streets
Technology and traffic demand is very uncertain in a Startup City, and we are experiencing a time of fast innovation in transportation. Will people prefer riding cars, buses, walking or cycling? Will smartphones facilitate carpooling and ridesharing and will driverless cars be readily available? I make the case for shared spaces in Startup Cities, as it allows for any transportation technology to emerge in that system. It also doesn't need infrastructure adaptations for changes in technology as it works as an open platform for transportation. Where there is low density roads will have more space for motorized transportation, which also allows for highers speeds. Where there is high density roads will serve pedestrians and cyclists. The shift between high density and low density, walkable or motorized will be emergent. Shared spaces also give streets their historical civic use, one that has been forgotten, specially in developed countries, for decades.

Streets also shouldn't be free of use to the final consumer, as it creates bad incentives for road use, subsidizing those who occupy more space - automobiles. Two different solutions are the Road Trust and the Congestion Charge.

Transportation
Free market for transportation, allowing not only innovation and competition in cars, buses and motorcycles but also jitneys, vans, driverless cars, carsharing and other transportation technologies. Jane Jacobs, the most influential urbanist of all times, also argued for a free market of transportation. The Road Trust model already considers safety and pollution issues regarding quality of each vehicle, which could also be adapted to the Congestion Charge model.

Pollution: Buildings
Buildings and/or leased subdivisions already have their own internal rules that usually do a good job mitigating negative externalities towards their neighbors. It is more common for residents to be aware and try to respect the rules established in their building or private community instead of the city's rules on those issues.

By internalizing externalities, it also becomes easier for these large units, (buildings or leased subdivisions) to engage in nuisance actions against eachother in case pollution conflicts happen. Remembering economist Ronald Coase, when property rights are well defined and transaction costs are low, externality issues such as pollution become much easier to handle. Both of these assumptions are the case in a Startup City. It is also interesting to remember historical accounts on this issue pointed out by economist Walter Block:

"...up into the 1830's and 1840's in Great Britain and in the United States and in many other countries as well, if we had what I'm now calling trespass, this would be summarily dealt within the old laws of nuisance. If someone is polluting someone else, or if a railroad is running by and setting off sparks in some farmers haystack, or if a manufacturer opens up a plant and inundates some little old ladys' washing with particles, what the victims would do is that they would go to court and say: "look, they're violating my private property rights and I'd like damages and an injunction to get them to stop it. And pretty much the courts will almost always grant injuctive relief. But around the 1850's a new philosophy took hold in the western industrialized countries, that there was something more than stinking, sniveling, selfish private property rights, and that is the 'Public Good'. What did the Public Good consist of? The Public Good consisted of economic wealth. And could we get economic wealth? By industry, manufacturing. So the next time some plaintiff came to the court and asked for indjunctive relief and damages, the court would say: 'you're being selfish and greedy by insisting on your louse property rights. We're going to give them carte blanche to do as they will with your property.' "
This approach may seem a fair result for those interested in preserving the environment, but may scare those interested in dynamic development and economic growth. But this set of institutions look interesting for sustainable growth, avoiding catastrophes such as contemporary China.

Imagine a polluting factory or a noisy airport wants to establish in the Startup City. In order for them to avoid nuisance claims (and to buy cheap land) they will tend to occupy terrains far away from the city center. Intermediate terrains will probably still be unoccupied and in ownership of the Startup City administration, which aims at future gains with those terrains, when the city limits reach proximity to the factory or the airport. They will then negotiate with the airport and factory administrators the conditions on how they can pollute adjacent areas or if they will have to lease larger areas than they will actually build upon, so most pollution is internalized inside their own area. These internalized areas can even be subleased to other companies, residents or factories who don't mind the pollution (or can mitigate it with insulation or other technologies) and are attracted by lower prices offered on that land.Noise Pollution: TrafficAir Pollution: TrafficDrainage